The fibroblast growth factors (FGFs) and the fibroblast growth factor receptors (FGFRs) play important roles in development, including skeletal and craniofacial development. Activating mutations in human FGFR1, FGFR2, and FGFRS are associated with skeletal dysplasias including craniosynostosis and dwarfing syndromes. These mutations affect the proliferation and differentiation of osteoblasts and chondrocytes. These data indicate a pivotal role for FGFR signaling in skeletal development: signaling by FGFRs must be tightly regulated for normal development. Important unresolved issues are the identification of pathways activated by FGFRs during skeletal development, and how these pathways feedback to regulate FGF signaling. Studies in Drosophila and vertebrates have demonstrated that members of the Sprouty (Spry) gene family are inhibitors of FGFR signaling. Spryl, Spry2, and Spry4 are expressed in the limb buds, and maxillary and mandibular arches, as well as other sites during mouse development. Retroviral-mediated over-expression of Spryl in chick limb buds results in chondrodysplasia. We have developed a conditional transgenic mouse model to explore the role of Spry family members in skeletal development. We show that conditional expression of Spryl in cranial neural crest cells results in severe craniofacial defects including the absence of the nasal and frontal bones. These mice also exhibit greatly reduced expression of the transcription factors Msx1, Msx2, and AP2 in craniofacial primordia. We hypothesize that the function of Spry in skeletal development is to maintain a balance between FGF- mediated proliferation, differentiation, and apoptosis, and that the level of Spry expression determines this balance. Accordingly, we propose the following three specific aims: 1) to test the hypothesis that over- expression of Spry inhibits FGF activity in bone primordia, leading to decreased overall osteoblast development; 2) to use loss-of-function approaches to investigate the role of Spry in osteoblast proliferation, differentiation, and apoptosis in vivo; and 3) to characterize the mechanisms by which Spry affects osteoblast proliferation, differentiation, and apoptosis using calvarial cultures in vitro. These studies will provide significant insight into the negative regulation of signaling pathways in craniofacial and skeletal development and how perturbations in this feedback signaling pathway lead to skeletal dysplasias.